Indonesia votes 2019: The last shout

Posted on April 15, 2019 By Kevin Evans

This final debate saw both presidential and vice-presidential candidates cover matters related to the economy, social welfare, finance and investment, and trade and industry. The format provided an opportunity for both sides to press home key themes of their campaign and to take final digs at perceived weaknesses of the other side.

Opening statements

Jokowi focused on the need for equity in regional development, arguing for the promotion of development outside of Java. This sits well with the fact that in the last election his strongest sources of support came from regions off-Java. He also promoted his welfare programs and, in an effort to pre-empt Prabowo, noted that under his presidency several major resource developments had been brought under state business control.

Prabowo used his opening statement to indeed raise the spectre of Indonesian assets being taken away, reciting his frequent exhortations for a very statist interpretation of Article 33 of the Constitution. He also introduced the issue of Indonesia’s de-industrialising – an issue very rarely discussed in contemporary Indonesia. Another key message from his campaign reiterated early was that the rising costs of essentials were squeezing household budgets.

Economy

The first question to candidates postulated that developed countries were aggressively pursuing policies that suppress global commodity prices for farmers and fishers, and asked what candidates would do for farmers and fishers affected. Jokowi noted that there was a need for the economy to move downstream to include processing of raw agricultural and plantation produce. There is also a need for better connectivity, he said, to allow farmers to trade directly with their consumers, to improve their income.

Prabowo replied that the country had been suffering from de-industrialisation and that no government had found a strategy to redress this, including the current government. He agreed with the idea that ‘downstreaming’ the economy was very important but asked why the government was encouraging imports. He later added that he was not blaming Jokowi for these problems. Rather he said it was the fault of ‘all of us’ and that successive governments had failed to prevent de-industrialisation. At this point some of Team Prabowo’s allies from Partai Demokrat clearly took offense (believing former president SBY had been blamed) and departed the auditorium.

‘All of us’ need to fix the issue Prabowo said, and noted the case study of China as one to be emulated. Sandiaga noted coolly that entrepreneurship needed to be fostered to encourage people to reveal opportunities for growth. On several occasions during the debate Sandiaga emerged as the calm, details-oriented and thoughtful counterpoint to Prabowo’s more passionate big picture narrative.

Social welfare

The second question focused on low levels of women’s participation in the workforce, together with discrimination and violence against women, asking what they would do. Sandiaga answered first, noting the proposed roll out of the small entrepreneurs program he pioneered in Jakarta (OK OCE) to boost women’s capacity and role in the economy. Amin responded for Team Jokowi noting that they were promoting greater gender equality in the workplace, in politics and in government. He noted the establishment of DEWI and DEDI (Tourist Village and Digital Village) programs to economically empower rural women. Jokowi added that his version of OK OCE had thus far provided support to 4.2 million women managers of micro-enterprises.

Finance and investment

Here, the questioner noted Indonesia’s tax ratio (state tax revenue over GDP) of only 10.3 per cent and efforts to raise revenue from Islamic ‘taxes’ such as zakat.  Prabowo said the KPK had indicated that state revenue should be almost twice what it is, observing that in the last year of the New Order the tax ratio had been 16 per cent. (CNN Indonesia fact checking indicates that the ratio in 1997/98, the last year of the New Order, was 11.5 per cent, not 16 per cent). He noted that neighbouring countries like Thailand and Malaysia were using modern computing systems and were enjoying higher tax ratios and that Indonesia could quickly raise its ratio to 16 per cent. Sandiaga noted that there was a need to raise levels of compliance, and that computers should be used to raise zakat.

Attempting to raise the tax ratio in one year, Jokowi warned, would cause major economic disruption. He said that the tax base and tax ratio would be raised steadily over time, as seen in the tax amnesty program. Amin mentioned several Islamic tax raising systems, indicating they would be ‘taking’ this tax, not merely receiving it, implying a degree of coercion.

Prabowo replied that he had not said he would be raising the tax ratio to 16 per cent in one year, to which Jokowi retorted that he had been replying to public statements made elsewhere by Prabowo. This was an interesting case of ‘gotcha’ by using bombastic statements made by a candidate elsewhere against them in a formal debate. Both Prabowo and Sandiaga noted the need to raise transparency in tax collection, Sandiaga adding that they were also proposing to raise the tax free threshold.

Trade and industry

This question focused on Islamic financing, halal industries and what candidates would do to expand halal industries – something that both teams agreed would be a positive move.

Amin opened, noting that the Sharia Economic Committee, chaired by the President, reflected a genuine interest in promoting halal industries noting that the government wanted Indonesia to be the centre of Islamic financing. He noted the need to develop the human resources necessary to achieve this, including on export products, and that Indonesian halal standards were already world class.

Prabowo replied that Indonesia was far from being a leader, ranked only tenth on the global Islamic index and just the fourth biggest halal importer. Prabowo shared his vision of establishing a Haj Savings Bank to both boost financing revenue and also improve transparency and freedom from undue influence. (Many scandals involving the Ministry of Religion make discussion of such a proposal quite prescient.) He also wondered aloud why London was the centre of Islamic financing.

Open questions

The first question from Jokowi – clearly an attempt to drive a wedge between Prabowo and young voters – focused on how Team Prabowo would support the digital economy through e-sports. Prabowo deftly left this for Sandiaga to answer, who noted that e-sports were part of the creative economy and that he saw much optimism among the young, whom he noted were ‘POP’ (positive, optimistic and productive).

Governments, Jokowi said, had to respond quickly as changes were taking place very fast. He also noted the need to demonstrate a mastery of fourth industrial revolution technologies, such as internet of things, big data and artificial intelligence. Sandiaga replied that light touch-ups to regulation was required given the rapid changes unfolding but that there was also a need to ensure that young people did not lose their moral compass amidst all the changes, referencing a discussion he had had with young e-sports enthusiast in rural South Sulawesi.

Prabowo’s question to Team Jokowi began with an appreciation of the focus on digital before returning to his frequent expressions of concern about dealing with basic needs, noting it was good to speak of unicorns but there was still a big trade deficit. He asked how Jokowi would deal with this.

Recent data had indicated the trade deficit was falling quite quickly, defended Jokowi, noting that some of his programs and investments would reduce dependence, especially on fuel imports such as bio-fuels. Jokowi also launched an attack on the folksy ‘this lady told me this or this lady told me that’ approach that Sandiaga has been using in all debates. This reflected a focus on the micro and not the macro,he said, and that the national picture and macro picture had to be kept front of mind.

Sandiaga asked the next question, countering Jokowi’s attack in doing so. He shared the plea of a state-owned enterprise (SOE) worker fearful of being dismissed due to the emergence of the new model of SOE holding companies. Many labour unions, he added, were also worried about this trend, and he asked how Team Jokowi would make SOEs world-class companies.

Jokowi did not shrink from the debate but said that they were creating sectoral holding companies, such as those in the oil and gas sector, agriculture and plantations companies, and in the traded good sector. All these holding SOEs, he explained, would in turn form part of a huge overarching holding company.

Prabowo replied that the state of the SOE sector was very poor, referring to them as ‘our last bastion’. He shared a Bloomberg study that found Japan Airlines could be profitable with flights filled to 60 per cent capacity while Garuda would need 120 per cent – and could thus not be profitable. In reply, Jokowi suggested Prabowo check details of dividends as paid into the state budget and highlighted the success of construction SOEs in entering foreign markets in the Middle East. He also reiterated that SOEs were working to attract foreign resource investments.

Amin presented the final question, asking what the other side would do to produce better income equity.

Prabowo again ‘owned’ his position as part of the wealthiest 1 per cent but said that within that 1 per cent, he was among those that lived in the middle of society. He said the foundations of income equity would be achieved through job creation, but that the economy had to be competitive and modern. He noted that one in three children in Jakarta went to school without breakfast. Jokowi replied that this was the first time he had heard Prabowo speak of the modern economy, and went on to discuss some of his government’s welfare programs. Sandiaga noted that without big data it would be hard to reach the isolated pockets of poverty.

Closing arguments

Amin noted that structural reform began in 1998 and that more substantive reform began in 2014 with infrastructure. Social welfare was now more secure, he said, but work was far from complete. Jokowi concluded by noting that for Indonesia to be a developed country, inflation had to be kept low, unemployment low and poverty reduced. No developed country, he said, was made up of scared and pessimistic people. Indonesians are always optimistic, he said, ande implored people to go out and vote, reassuring viewers that he would maintain links with all sides of politics.

In a populist flourish, Sandiaga announced that he and Prabowo would not take an income for the whole five years should they be elected, preferring to give it to the poor. He then made a catchy wordplay with the acronym for polling station (tempat pemungutan suara – TPS). He repetitively listed each of their key pledges, saying if you want a job, clean government, reduced power bills, et cetera then T-P-S (Tusuk Prabowo Sandi – Vote for Prabowo Sandi). It was a clever finish. Prabowo then concluded by essentially thanking all those groups that had been supporting their campaign.

Analysis

This debate was quite solid and a little exhausting and brought closure to the whole campaign. Both sides made some good points, but overall this one was better prosecuted by the challenger. Perhaps the biggest winner, however, was Sandiaga Uno, who emerged as composed, thoughtful and positive.

The final images were very revealing. As the debate closed, Prabowo and Sandi embraced warmly. The picture on the other side of the stage was very awkward as Jokowi and Amin came together in what started as a possible hand shake but ended in a pro forma embrace that was polite but not warm.

Prabowo’s statement on emulating China was extraordinary considering the frequent attempts to manufacture a ‘red scare’ by people close to the Prabowo camp, together with generally expressed concerns about the rise of China in the region. It was also extraordinary considering that much of the progress over the past generation in China has been due to its greater engagement in the global economy and the expansion of space for its private sector, foreign and domestic.

Both developments stand starkly at odds with Prabowo’s autarchist and statist rhetoric throughout his campaign. It is more likely that what he was suggesting is that Indonesia should emulate China’s long term 10 per cent a year growth rates (the result) rather than the way this was achieved (the process). This may reflect the aspirations of his vulnerable middle-class followers, ‘Prabowo’s Battlers’ as it were, similar to the way these people look to the glimmering skylines of Dubai and the Arab Peninsula as evidence that conservative Islam produces great wealth (the result) rather than the process (low populations, lots of oil, and careful tracking of the Singaporean growth model – strong commercial and contracts law, strong adjudication and wide openness to foreign investment and foreign workers).

With this final debate concluded the cameras have now gone quiet. The newspapers will refrain from election news. Election paraphernalia across the nation was taken down before we awoke the following morning on Sunday 14 April. The three-day quiet period has begun before polling on Wednesday 17 April.

Early voting has already started in overseas polling stations. Voting by Indonesian expatriates living across Australia has been very enthusiastic indeed – the number of votes cast appears to be vastly larger than in 2014.

At this stage, and considering the state of usually reliable polls as released, the odds remain well in favour of Team Jokowi. All sides will be preparing for polling day – deploying an army of scrutineers and lawyers. It is almost impossible to imagine that the losing candidate will not make an appeal to the Constitutional Court, as is their right. I would expect that the loser will respect the verdict of the Court – as has been the case after so many previous appeals.

 

Kevin Evans

Kevin Evans

Indonesia Director